Rupee breaches Rs 73 against dollar
Despite continuous efforts by the central government to stem rupee fall, the Indian currency on Wednesday plunged by 43 paise to breach the historic low of 73 level as soaring crude oil prices fuelled worries over capital outflows and widening current account deficit
Mumbai: Despite continuous efforts by the central government to stem rupee fall, the Indian currency on Wednesday plunged by 43 paise to breach the historic low of 73 level as soaring crude oil prices fuelled worries over capital outflows and widening current account deficit.
The domestic currency closed at a record low of 73.34, down by 43 paise or 0.59 per cent at the interbank foreign exchange here. In the day trade, the rupee crashed to its all-time low of 73.42 per dollar as crude oil prices breached the $85 per barrel mark, leading to huge outflows of cash. Investors remained concerned over sustained foreign capital outflows and soaring crude oil prices, analysts said.
After breaching the $85 per barrel level, the benchmark Brent crude stayed near four-year high levels at $84.86 per barrel. According to the provisional exchange data, foreign investors withdrew Rs 1,550 crore on a net basis from capital markets on Wednesday.
Rising US interest rates and bond yields have encouraged investors to pull out funds from emerging markets to pocket better returns, analysts said. "The rupee has made a new record low on Wednesday on the back of consistent rise in the crude oil prices. A sharp rise in crude oil along with steep depreciation in the rupee might push inflation higher in coming months," Rushabh Maru - Research Analyst, Anand Rathi Shares and Stock Brokers.
The Reserve Bank refused to open a special window for oil marketing companies which affected market sentiments, VK Sharma, Head Private Client Group & Capital Market Strategy at HDFC Securities. The rupee opened lower at 73.26 per dollar due to high crude oil prices against the last close of 72.91 per dollar.
The currency pared some losses to touch a high of 72.90 per dollar on market speculation that RBI may open special dollar window for oil companies. However, without any clear signals from the central bank, the rupee crashed to all-time lows before settling at 73.34. Meanwhile, the FBIL set the reference rate for the dollar at 73.02 per dollar. The reference rate for euro was fixed at 84.57 against 84.37 previously and for the British pound at 94.98 against 94.88 on October 1.